Health care spending has risen more quickly than inflation over the last 30 years, straining the budgets of consumers, patients, employers, government programs, and tax payers. The key challenge facing policy makers is how to design policies that contain costs efficiently - reducing unnecessary expenditures while maintaining or increasing expenditures on high value services. Determining the appropriate role of private insurance in promoting the efficient utilization of care is an important part of that challenge. The objective of this research is to provide new evidence on how private health insurance influences the utilization, financing, and outcomes of health care in publicly funded programs by examining the experience of the U.S. Medicare program. The proposed research has the following two specific aims: 1) To identify the extent and sources of risk selection between different types of insurance that either supplement or replace Medicare coverage, and 2) To determine how private insurance either supplementing or replacing Medicare coverage affects the utilization, financing, and outcomes of care for Medicare beneficiaries. Using econometric methods to examine secondary data sources, we will identify the extent and sources of risk selection in markets for insurance supplementing or replacing Medicare coverage, the role of policies in either attenuating or exacerbating risk selection, and the effects of private supplementary and replacement insurance on the utilization, financing, and outcomes of care for Medicare beneficiaries. For a subset of beneficiaries with particular chronic conditions, we will examine the effects of insurance coverage on process of care. The primary data sources for the project will be the Health and Retirement Survey, The Medicare Current Beneficiary Survey, and The Medical Expenditure Panel Survey. The project will provide evidence on the effects of different types of private coverage on both beneficiaries and the Medicare program. This evidence is essential for determining the extent to which private insurance options should be viewed as a mechanism to enhance the program. Evidence from the Medicare program, in turn, will inform decision-making regarding the role of private health insurance in other policy contexts, such as promoting private coverage in state Medicaid programs, establishing health insurance exchanges, and creating competition between private plans and a publicly administered alternative. PUBLIC HEALTH RELEVANCE: The objective of this research is to provide new evidence on how private health insurance influences the utilization, financing, and outcomes of health care in publicly funded programs by examining the experience of the U.S. Medicare program. We will examine the extent and sources risk selection in these markets as well as how the different types of private coverage enroll affect the utilization, cost, and outcomes of medical care. We anticipate that this research will provide important evidence on the effects of different models of financing health insurance on the Medicare program and its beneficiaries as well as on the potential effects of similar policies in other contexts.